Bill Bartmann, co-founder of Consumer Financial Services, was found innocent last Wednesday after a four-day jury deliberation, according to published reports. Bartmann had been charged with money laundering and conspiracy to commit fraud. The CFS securitizations - which were backed by charged-off consumer debt - fell apart in 1998 when it was learned that supposedly cured receivables had merely been purchased out of the trusts by a subsidiary of CFS.
Mark Brooks has joined Orrick, Herrington & Sutcliffe LLP as a partner in its Tokyo office, where he will focus on real estate finance and securitizations in Asia. Previously Brooks was at Skadden Arps. Orrick is well known for a focus on Japanese CMBS and is said to be near to closing Taiwan's first residential mortgage securitization.
The DVI Receivables Trust ABS holder committee convened last week in a five-hour session in New York City, sources said, to discuss certain lingering issues facing bondholders now that the servicing transfer to U.S. Bank is underway. The session was organized by buyside firms PPM America and Invesco, and access was limited to committee members, with the rating agencies and non-committee bondholders absent.
The American Securitization Forum is slated to unveil the inaugural members of its newly created ASF Hall of Fame at the ASF Winter Conference dinner ceremony. The ASF Hall of Fame will be for members of the finance industry, outside of securitization, who have had an impact on the market. The inaugural members have yet to be announced.
ACE Ltd., the parent company of financial guarantor Ace Guaranty Corp., announced plans to spin off its monoline bond insurance business. ACE plans to sell roughly 65% to 75% of the business in the form of a holding company with two primary subsidiaries: AGC and ACE Capital Re International. ACE has not announced timing, expected price or the underwriter of the proposed IPO.
Northwest Airlines extended its offer to exchange unsecured debt due over the next two years for newly issued EETC notes through Dec. 9. The proposed exchange for up to $551 million of series 2003-1 class D notes carries a 10.5% coupon due April 2009. Morgan Stanley is leading the exchange for the new paper, which is rated Caa1 by Moody's Investors Service, single-B minus by Standard & Poor's Corp. and single-B by Fitch Ratings. As of Dec. 2, the company reported $56.6 million in tenders from unsecured bondholders interested in the exchange.
Specialty servicer Portfolio Financial Servicing Co. has been named backup servicer for specialty auto finance company CENTRIX Financial LLC. In its role, PFSC will provide complete backup contract functions and disaster recovery components for the financial firm. In addition, PFSC will collaborate with CENTRIX on special projects aimed at enhancing the management of current and future portfolio growth.
The European Securitization Forum, in conjunction with The Bond Market Association, has submitted a letter to the European Central Bank recommending an expansion of the types of assets allowed in securitization trusts, as well as procedures for standardizing reporting standards. The institutions request that assets such as bank loans, equities and debt securities issued in euros by issuers established in the non-European Economic Area (EEA) G10 countries be acceptable collateral types, instead of the current two-tier system.
Fewer than 3% of the 13,419 U.S. structured finance securities issued since 1993 have defaulted, according to a default study by Moody's Investors Service. Of these, 390 (2.91%) experienced payment defaults. The defaults were widely distributed across the ABS, CMBS and RMBS sectors. There were 167 in ABS, 80 in CMBS and 143 in RMBS. The rating agency stated that the largest number of material impaired securities came from the ABS sector with 174 material impairments while RMBS had 121 material impairments. In CMBS, the study said interest shortfalls are the cause of all the defaults in the sector to date. Most recent defaults have resulted from appraisal reductions and special servicing fees.
The Nonprime Mortgage Report Default Risk Index for the fall quarter of 2003 - published by Ann Arbor, Michigan-based University Financial Associates - is 98, rising 3 points from a revised 95 the previous quarter. The index has risen by 20 index points since its low in late 1998, though it remains moderate by historical standards. This index measures the risk of default on newly originated nonprime mortgages.